THE RNS issued on June 13th informed shareholders that the company had a strong balance sheet. The commitment and the costs for a stage III trial was known at that stage, and management were obviously looking for a partner. However, in the event that they did not find a partner, and decided not to commercialise the CSD 500, the funds were not there and the statement was a misrepresentation, in fact meaningless, and gave a false impression unless the company were confident of securing a deal. On June 13th the share price was around 34p. A placing could have been done then at 28p/30p by the issuance of 20 to 25 million shares. Instead massive share price destruction through disappointing news and disastrous interview with the press in September, foloowed by steady price decline results in a placing at 7p through the issuance of over 70 million shares. I'm holding these shares in an account for my adolesecent son. Maybe the product will see the light of day before he needs to use it. Woeful!
Strangely this company was in my thoughts this afternoon. With the funds they have in place, I expected them to get further down the track before the placing. Clearly there was no institutional support. This has been appalingly managed. As I have said before, convinced that the former FD left because he didn't want to go down this route.
Per the company's website, there is an audit committee.
I would be surprised if they have internal auditors. They are not mentioned anywhere.
Lack of separation of duties is clearly a big problem. Looks as though Marsh was not only making the payments but also passing the accounting entries.
One of the risks mentioned in the annual report was the risk of reliance on key personnel!
Say no more.
I did raise the possibility of undisclosed overdrafts yesterday. Chris Marsh would have had to forge another officer's signature to open the account. Key question now is what was the account used for, and whether funds from the ordinary bank account were transferred into it. Auditors should get confirmation from the bank on year-end balances but they can only write to the banks they know about. The existence of the undisclosed accounts at least gives the investigators a timeline on when that kind of subterfuge started.
@lignumvitae
Why are debtors in the accounts representing two months' sales? (There will of course be the quarterly prepayment for rent but that doesn't explain it.) Has the FD been booking cash withdrawals to receivables? If there is fraud (cash withdrawals), are they insured? I agree that it's more likely that creditors/expenses have been recorded late and that the profits have been overstated for several years. The business is viable but at a different level of profitability.
The Company's shares remain suspended from trading on AIM. At present, the Directors do not expect that suspension to be lifted at least until (a) there is there is greater clarity disclosed to the market around the financial position of the Group and (b) they are satisfied that the Company's financial reporting function is appropriate for a quoted company.
That's why investing on Monday is a very risky proposition.
They will be looking into those other companies in which he was director to see if there any related party transactions. The difficulty at the moment that we do not know whether this was straight forward defalcations in which case the underlying business is profitable or there has been persistent understatement of expenses /or overstatement of revenues in which case the valuation will be seriously reduced.
The now ex FD has been charged with suspicion of fraud by false representation, i.e. providing misleading information. So far he has not been charged with dipping his hand in the till, but it is possible that he has been covering unauthorised withdrawals by falsifying the accounts. The gross margin on this business is just under 80%, which seems very high. I note that balances for trade creditors and other payables have increased by 40% since 2013 while all costs have increased by nearly 100% per annum. Receivables have doubled to £11 million, strange for a cake business to have nearly two months sales outstanding in receivables. Presumably the auditors did obtain third party verification of all bank accounts at year-end. Was there a bank overdraft that they did not know about? This is dreadful news for all shareholders. All members of the board should be required to resign, they have clearly failed in their duties towards shareholders.
Cannot see how the CEO didn't know what was going on. He might also be asked to help police in their enquiries.
The best thing that the BOD can do is issue a RNS at 7:00 confirming that the placing at 10p was oversubscribed and that NIPT has found a new broker. I certainly will not be selling.
Looking at the share price performance over the past ten years, the price on offer is about 10% below the average, but considerably a higher discount when compared to the past three years. As mentioned below it's an all paper deal with the consideration being paid in shares which will not be traded in London. This is about executive ambition taking precedence over the interests of shareholders. Hopefully the institutions will insist on a higher price, i.e. more Barrick shares for each RRS share.
Futura is exploring a number of options for additional funding whilst it progresses its first Phase 3 programme for MED2002. This will ensure the Company has sufficient resources to maximise shareholder value from the commercial opportunity for MED2002. The Company will also announce its interim results for the six months ended 30 June 2018 on Wednesday, 26 September 2018.
Does anyone else interpret this to mean that there could be two announcements on Wednesday or is it just sloppy drafting?